A man named Mike recently called into “The Ramsey Show” with a complicated and emotional family money situation. His sister is going through a divorce, has three kids, and wants to keep both her house and her dental practice. But there’s one big problem: she has less than $50,000 saved, including retirement funds.
Parents Are Draining Their Nest Egg
Mike explained that his sister and her soon-to-be ex-husband had been living large for years–private schools for the kids, luxury cars, and lavish vacations. “It appears from an outsider that they had a very high burn rate,” he said. When the divorce process started, it became clear they had saved very little.
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To keep the house and practice, she needs $800,000 to buy out her husband. She first went to their retired parents and asked for $400,000. They agreed. Then she asked Mike and his husband for the other half. Mike said he could only help by selling one of their properties, but before he could decide, she told him not to worry, she had it covered.
Turns out, the parents decided to give her the full $800,000.
“They claim that she’s overleveraged on debt and can’t get a loan from a bank,” Mike said. “My parents have this parental guilt. They feel that she’s a victim of the situation.”
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Enabling Or Helping?
Mike said his parents are financially stable, but the $800,000 is still coming out of their retirement savings. He feels it goes against how they lived their entire lives. “My parents have worked hard and lived frugally their whole lives,” Mike said. “They’ve provided us with fantastic childhoods. They paid for our college, and I want them to enjoy their retirement.”
Co-host Rachel Cruze said it sounded like Mike’s sister had always gotten what she wanted, never heard the word “no,” and used debt to maintain a lifestyle she couldn’t truly afford. “That’s exactly what the savings show. They have no money saved. They’ve spent everything or more.”
On the other hand, co-host John Delony warned that this kind of support could come at a major emotional cost. “He is guaranteeing by his participation in this… that there will be a rift in their relationship forever,” he said, referring to Mike’s father. And when Mike’s sister starts spending again, he added, it will cause more problems: “His first instinct is going to be, why did she pay me back or where’d she get that money to buy that car?”
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He emphasized that even if she was misled by her husband, that doesn’t justify continuing to avoid the financial truth. “She can’t afford the house she lives in. She can’t afford to buy a dental practice as much as she wants to own one,” Delony said.
This personal story reflects a broader problem in the U.S. financial mindset. “That’s how our country is in almost $40 trillion worth of debt,” he said. “That’s how student loan debt is almost $2 trillion. I deserve to have this. I deserve to have that.”
Mike, who is also the executor of their parents’ will, has voiced his concerns, but knows he ultimately has no control. “What sucks about your position is you have no control. You really don’t,” Cruze said.
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